Microsoft Reports Strong Q4 as Azure Crosses $100 Billion, Revenue Rises 18%

Microsoft Corp. reported strong fourth-quarter results for fiscal 2026 on Wednesday, with revenue rising 18% year-on-year (YoY) to $90 billion, driven by continued growth in its cloud and artificial intelligence (AI) businesses. Net income increased 31% to $35.8 billion, while operating income rose 18% to $40.6 billion, the company said.

Diluted earnings per share increased 32% to $4.81 on a GAAP basis. Microsoft said its quarterly results benefited from a $3.2 billion gain on its investment in Anthropic and lower-than-expected expenses related to its Voluntary Retirement Program. These gains were partly offset by severance and impairment charges in its Xbox business.

Chairman and Chief Executive Officer (CEO) Satya Nadella said the company continued to help customers turn AI investments into business outcomes. "This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation," he said.

Azure, Cloud Business Lead Growth

Microsoft Cloud revenue grew 27% YoY to $59.3 billion during the quarter, while commercial remaining performance obligation, a measure of future contracted revenue, increased 84% to $678 billion.

The Intelligent Cloud segment reported revenue of $39.3 billion, up 32% from a year earlier. Revenue from Azure and other cloud services rose 43%, highlighting continued demand for Microsoft's cloud infrastructure and AI offerings.

In a post on X after the earnings announcement, Nadella described fiscal 2026 as a record year for Microsoft. He said annual revenue reached $331.8 billion, Microsoft Cloud generated $214 billion in revenue, while Azure crossed the $100 billion milestone.

Copilot Adoption Continues to Expand

Microsoft also highlighted growing adoption of its AI assistant, Microsoft 365 Copilot. Nadella said the company is expanding Copilot beyond chat into new experiences while continuing to improve performance and user satisfaction.

According to Nadella, the number of conversations per user nearly doubled from a year earlier, while the number of customers with deployments exceeding 50,000 seats increased sevenfold. He added that more organisations are rolling out Copilot to a majority of their information workers.

Across its businesses, revenue in Productivity and Business Processes rose 14% to $37.8 billion, supported by growth in Microsoft 365, LinkedIn and Dynamics 365. Revenue in the More Personal Computing segment, however, fell 4% to $12.9 billion, as Windows OEM and Devices revenue declined 7% and Xbox content and services revenue dropped 10%. Microsoft also returned $10.2 billion to shareholders through dividends and share repurchases during the quarter.